July 12 (Bloomberg) -- Egypt’s first elected civilian
president arrived in Saudi Arabia to strengthen ties with the
region’s biggest economy as negotiations to form a government in
Cairo continue.

Mohamed Mursi, on his first foreign trip since winning the
presidency last month, met Saudi officials and members of the
royal family in Jeddah before performing the lesser pilgrimage,
or Umrah, in Mecca today. His visit follows an invitation from
King Abdullah, who had been allied with Egypt’s deposed leader,
Hosni Mubarak.

“His economic agenda will be firmly focused on capital
flows -- both direct Saudi investment and official aid,” said
Said Hirsh, an economist at Capital Economics in London. “Saudi
Arabia will have no problem helping Egypt with more funds. Of
course, it has to first deliver on its earlier pledges, some $4
billion. But I am sure it will be ready to provide more funding
if it feels confident that Egyptian politics will remain firmly
aligned to those in the gulf.”

Mursi has struggled to assert his authority over Egypt’s
former ruling generals and confronted the judiciary. A
constitutional court overturned his order to reinstate
parliament, a ruling he accepted yesterday. He inherits an
economy battered by 17 months of unrest that followed the
uprising against Mubarak.

Egypt, which used up more than a half of its international
reserves in that period, is seeking to reach a $3.2 billion loan
agreement with the International Monetary Fund.

Prime Minister

Mursi is expected to name his first prime minister “within
hours” of arriving back in Cairo, the state-run Al-Gomhuria
newspaper reported. State-run Nile TV said he should finish the
visit today. State media have tipped Mahmoud Abul-Eyoun, a
former central bank governor, as the likeliest candidate.

The Freedom and Justice Party, the Muslim Brotherhood’s
political arm, wants 35 percent of the posts in the new
government, according to Al-Gomhuria, which named Essam el-Erian
and Mohammed el-Beltagy, among the party’s leaders, as possible
Cabinet members.

Mursi, 60, who comes from the Brotherhood’s ranks, was
elected president with a slender majority. He has decreed that
another parliamentary vote will be held within 60 days of the
approval of a new constitution in a referendum. The charter has
yet to be drafted.

Foreign Income

Remittances from Egyptians working in Saudi Arabia, the
world’s top oil producer, accounted for 13 percent of the $7.8
billion that entered Egypt in the fiscal year through June 2009,
according to last available breakdown of data on the Central
Bank of Egypt’s website. That’s the fourth-largest contribution
behind expatriates sending money home from the U.S., Kuwait and
the United Arab Emirates.

Mursi’s visit “is important from Egypt’s economic
perspective, given that is heavily reliant on tourism,
remittances and capital flows from the Gulf,” said Hirsh.
“From a Saudi perspective, Egypt is perhaps the most important
geopolitically of all the Arab countries. So making sure that it
remains on the side of the Gulf states is crucial given troubles
with Iran.”

Tensions have long existed between the Muslim Brotherhood
and the Saudi monarchy, which follows the austere Wahhabi
interpretation of Islam. While Egypt and Saudi Arabia enjoyed
close relations under Mubarak, the government in Riyadh withdrew
its ambassador from Cairo in April after a diplomatic spat over
the detention of a rights activist, Ahmed el-Gizawy, in the
kingdom.

Saudi officials agreed to increase investment in Egypt and
provide more job opportunities for Egyptians, MENA reported
today, citing Yasser Ali, a spokesman for Mursi. Saudi Arabia,
which pledged to provide Egypt with almost $4 billion in aid
last year, deposited $1 billion at the central bank in Cairo in
May.